Increasing dividends before April 2010
Further to the recent coverage in The Telegraph - I do have a concern that the position may not be quite as simple as the article suggests. Bringing forward dividends to avoid the 50% rate of tax from April 2010 may be sensible in many situations. However, shareholders with income just under £150,000 should be aware of the impact that this may have on their tax position this year. The same would apply to directors taking larger bonuses this year for the same reason.
If their income exceeds £150,000 they will fall within the new rules that restrict tax relief on personal pension contributions or impose a charge to personal tax on employer contributions. Potentially the rules can start to bite where total (personal and company) contributions exceed £20,000.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this blog with Cathy you can call her on 01908 605552.
Date: 4th November, 2009
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